Swartz Creek, MI asked in Bankruptcy for Michigan

Q: My husband is custodian on utma accounts we opened for our children when they were born, we put 20 dollars a week in

Them, can the trustee take that money if we file chapter 7?

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2 Lawyer Answers
Trent Harris
Trent Harris
Answered
  • Bankruptcy Lawyer
  • Jackson, MI
  • Licensed in Michigan

A: Generally, no. Property of the your bankruptcy estate does not include any power that the debtor (you) may exercise solely for the benefit of [a person] other than [yourself], i.e. your child. See 11 U.S.C. 541(b)(1). Under Michigan law the funds in the UGMA account belong to your children, not you. See MCL 554.536(2). However, if you or your husband have transferred money to the UGMA accounts within 2 years before filing bankruptcy, the money transferred in the previous 2 years could be deemed voidable transfers and recovered by the trustee. Similarly, if you or your husband transferred money to the UGMA account to place money outside the reach of creditors, the transfers could be set aside on that basis too. Also, if your husband has used the account(s) improperly, for example by spending UGMA money on expenses ineligible to be spent from the UGMA account, then the protection of the accounts could be lost.

As always, you get what you pay for. Be sure to talk to a qualified attorney about your specific situation before choosing to rely on any information you get from internet discussion boards, such as this one.

Bruce Alexander Minnick agrees with this answer

1 user found this answer helpful

Timothy Denison
Timothy Denison
Answered
  • Bankruptcy Lawyer
  • Louisville, KY

A: No. That property belongs to the children and should not be included in your estate.

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